Pension contributions: concern as Britons risk “serious financial damage” | Personal Finances | Finance
It comes at a time when many have found themselves facing financial hardship due to the coronavirus pandemic. From wage cuts to job losses, COVID-19 has affected the finances of millions of people, prompting some to prioritize examining their financial futures.
However, while it is suggested that some use this time to review and update their retirement strategy, it does not appear to be the case.
A recent survey by My Pension Expert found that among 1,281 UK adults aged 40 and over, only 22% had undertaken a detailed review of their retirement savings strategy in the previous 12 months.
Andrew Megson, Executive Chairman of My Pension Expert, spoke exclusively to Express.co.uk about the importance of retirement engagement.
“The COVID-19 pandemic, coupled with interest rates falling to historic lows of 0.1%, has inevitably compromised people’s job security and, as a result, their financial security,” he said. he declares.
“Indeed, in the last three months of 2020, the UK unemployment rate stood at 5.1%, an increase of 1.3% from the previous year.
“As such, household finances will likely have been strained like never before and families and individuals find it difficult to stay afloat with reduced incomes.
“With finances under such pressure, one would assume that people would reconsider their retirement savings strategy, or at least check with their pension savings and investments.
“However, that’s not the case – it seems people just don’t care about the state of their retirement finances.
‘Indeed, a recent survey of over 1,200 UK adults over 40, commissioned by My Pension Expert, found that over the past twelve months an overwhelming majority (78%) of adults did have not reviewed their retirement savings strategy.
“Worryingly, only 14% of those over 40 have sought independent financial advice.
“After these numbers, it’s no surprise that nearly half (46%) of early retirees haven’t even checked how much they’ve saved in their pension fund over the past twelve months.
“This lack of commitment is worrying because it can cause serious financial damage down the road.
“Indeed, failing to check in with your retirement pot could mean that people fail to see that their savings or investments are not reaching the goals they need.
“The sudden realization of insufficient savings can lead people to make rash and reckless decisions in an attempt to quickly restore their pot to value.
“Together, the industry can develop a sustainable strategy to educate people about the importance of consistently engaging with their retirement, as well as seeking independent financial advice when needed.
“This could be achieved by making it easier for savers to check their retirement status, removing jargon when offering advice or discussing various investment options or retirement income products.
“Of course, consumer behavior won’t change overnight – we can’t expect people over 40 to suddenly start checking their pension funds on a monthly basis.
“However, by improving people’s access to pension funds, as well as to financial advice, I think we will start to see a gradual improvement in pension engagement in the UK.”